- Fine office company produces two products P100 and P200. - Sales price per P100 is 660....
Question:
- Sales price per P100 is 660.
- sales price per P200 is 759.
There are 800 units from P100 in finished goods inventory at the end of 2020 with value of $3,60,000 and 500 units from P200 at the end of 2020 value 3,00,000. At the end of each quarter, Fine office company requires enquires ending inventory to be equal to 6% of the following quarters budgeted sales in units.
The required ending inventory omfor Dec 31, 2021 are 600 units for P100 and 400 units for P200.
- Each P100 unit uses 66 sq. ft. of steel during the manufacturing process. The cost of steel for 2021 is estimated to be $8 per sq.ft.
Each P200 unit uses 88 sq.ft. of steel during the manufacturing process.
- Fine office company currently has 30,000 sq.ft. of steel in the beginning inventory. At the end of each quarter, Fine office company wants to have 52,800 sq. ft. of ending inventory.
- Each product requires 5.28 machine hours and 2.64 direct labour hrs to produce.
- Direct labour costs $18.48 per direct labour hour.
- Fine office company allocates manufacturing overhead costs based in the estimated machine hours. Estimated manufacturing costs for 2021 are $8,31,600 and are all variable.
- For each quarter, it is estimated that 40% of sales will be cash and 60% will be credit sales. On the credit sales, 80% pay in the quarter of the dale and 20% pau in the following quarter. Credit sales from Q4 2020 were $1,300,000.
-Direct labour costs and manufacturing overhead costs are paid for in cash in the quarter they occured.
-Assume operating expenses occur evenly throughout the year and all paid in cash.
- For each quarter, 70% of material purchases are paid for in cash in the quarter of the purchase and 30% are paid in the following quarter. Purchase if materials from Q4 2020 were $1,500,000.
- Fine office company will pay $60,000 in dividends in Q4.
- currently, the cash balance in the bank is $15,000. Fine office company wants to maintain a minimum cash balance of $10,000 in the bank for each quarter.
- Budgeted sales volumes are:
P100 Q1-5676, Q2-6072, Q3-5940, Q4-6336
P200 Q1-6811, Q2-7286, Q3-7128, Q4-7603
-selling and administration expanses for the budgeted year as follows:
- Variable costs:
Delivery costs are based on $0.3 per sales unit.
Commisions are based kn 0.1% of sales value.
- Fixed costs:
Accounting & professional services - $3,600
Administrative & sales salaries - $140,000
Advertising - $20,000
computer costs - $9,000
Depreciation- $70,000
Office supplies - $5,000
printing - $3,000
Insurance- $4,000
property taxes - $2,000
Rent - $40,000
Utilities - $3,400
Total fixed costs - $ 300,000
- Fine office company will purchase a new machine on 1/1/2021 worth $700,000 amd will make two equal payments. The first payment will be in Q2 and the second in Q4. Assume the machine was purchased at the beginning of the year.
- Taxation is 30% on taxable income and paid at the end of Q4 each year.
- Balance sheet information at 31st December 2020 is as follows;
PPE $100,000
accumuated depreciation $100,000
Common stock $580,000
Retained earnings $145,000
- For cost of goods and sold (COGS)
Add total costs of production + beginning finished goods - ending finished goods inventory.
- Interest of $9,000 on loans is paid in total at the end of the year and is a fixed cost.
Selling an administration budget for each quarter & worksheets for collections and disbursement.
Expert Answer:
Detailed Explanation Based on the information provided heres a breakdown of how to proceed with the selling and administrative expense budget the cost of goods sold COGS and the other financial calcul... View the full answer
